<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q



(Mark One)

[X X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
                              

For the quarterly period ended      September 30, 1996
                               ------------------------------------------------
 
                                       OR

[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
                              

For the transition period from
                              ________________________to________________________

                              ________________________


For Quarter Ended September 30, 1996         Commission File No. 0-25648


                            AFG Investment Trust D
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
 
<S>                                                   <C>
Delaware                                                      04-3157232
----------------------------------------------------      --------------
(State or other jurisdiction of                           (IRS Employer
incorporation or organization)                            Identification No.)
 
98 North Washington Street, Boston, MA                          02114
----------------------------------------------------      --------------
(Address of principal executive offices)                     (Zip Code)
 
Registrant's telephone number, including area code        (617) 854-5800
                                                          --------------
 
</TABLE>
--------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report.)

  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes X     No
                                               ---       ---   

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

  Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes    No
   ---   ---
 

                                       
<PAGE>
 
                            AFG Investment Trust D

                                   FORM 10-Q

                                     INDEX



                                                              
PART I.  FINANCIAL INFORMATION:
<TABLE>
<CAPTION>                                                       
                                                                                           Page
                                                                                           ----
Item 1.   Financial Statements
<S>                                                                       <C>
 
     Statement of Financial Position
       at September 30, 1996 and December 31, 1995                                           3
 
     Statement of Operations
       for the three and nine months ended September 30, 1996 and 1995                       4
 
     Statement of Cash Flows
       for the nine months ended September 30, 1996 and 1995                                 5
 
     Notes to the Financial Statements                                                     6-9
 

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                           10-13


PART II. OTHER INFORMATION:

Items 1 - 6                                                                                 14

</TABLE>

                                       2
<PAGE>
 
                             AFG Investment Trust D

                        STATEMENT OF FINANCIAL POSITION
                    September 30, 1996 and December 31, 1995

                                  (Unaudited)

<TABLE>
<CAPTION>
 
 
                                          September 30,   December 31,
                                               1996           1995
                                          --------------  -------------
<S>                                       <C>             <C>
ASSETS
------
Cash and cash equivalents                   $ 6,752,482    $   669,998

Rents receivable                              1,847,700      2,854,161

Accounts receivable - affiliate                 665,277        109,551

Equipment at cost, net of accumulated
 depreciation of $26,428,933 and 
 $15,958,176 at September 30, 1996
 and December 31, 1995                       74,163,140     83,883,410
          
Organization costs, net of accumulated
 amortization of $3,000 and $2,250 at
 September 30, 1996 and December 31, 1995         2,000          2,750
                                            -----------    -----------
       Total assets                         $83,430,599    $87,519,870
                                            ===========    ===========
 
LIABILITIES AND PARTICIPANTS' CAPITAL
----------------------------------------
 
Notes payable                               $38,800,037    $42,655,805
Accrued interest                                536,332        677,345
Accrued liabilities                              18,750         43,851
Accrued liabilities - affiliate                 114,936         97,588
Deferred rental income                          211,260        358,760
Cash distributions payable to                   314,216        241,702
 participants                               -----------    -----------

       Total liabilities                     39,995,531     44,075,051
                                            -----------    -----------
Participants' capital (deficit):
   Managing Trustee                             (37,362)       (37,265)
   Special Beneficiary                         (315,490)      (314,685)
   Beneficiary Interests (2,089,030 
    Interests; initial purchase price
    of $25 each)                             43,787,920     43,796,769
                                            -----------    -----------
          
       Total participants' capital           43,435,068     43,444,819
                                            -----------    -----------

       Total liabilities and                $83,430,599    $87,519,870
          participants' capital             ===========    ===========
 
</TABLE>
                  The accompanying notes are an integral part
                         of these financial statements.

                                       3
<PAGE>
 
                             AFG Investment Trust D

                            STATEMENT OF OPERATIONS
        for the three and nine months ended September 30, 1996 and 1995

                                  (Unaudited)

<TABLE>
<CAPTION>
 
 
                                                   Three Months              Nine Months
                                               Ended September 30,       Ended September 30,
                                               1996         1995          1996           1995
                                           ------------  ------------  -------------  ------------
<S>                                       <C>          <C>           <C>            <C>
Income:

        Lease revenue                      $5,508,081   $4,454,472    $16,637,773    $12,369,593

        Interest income                        53,701       76,910        100,550        354,016

        Gain (loss) on sale of equipment           --       (5,645)       (92,007)         1,542
                                           ----------   ----------    -----------    -----------

          Total income                      5,561,782    4,525,737     16,646,316     12,725,151
                                           ----------   ----------    -----------    -----------
 
Expenses:

        Depreciation and amortization       3,522,837    2,805,791     10,604,049      7,875,321

        Interest expense                      864,785      857,274      2,628,115      2,284,384

        Interest expense - affiliate               --           --             --          1,707

        Equipment management fees             
          - affiliate                         242,532      193,236        733,004        532,187

        Operating expenses - affiliate        182,792       72,407        443,035        232,512
                                           ----------   ----------    -----------    -----------

          Total expenses                    4,812,946    3,928,708     14,408,203     10,926,111
                                           ----------   ----------    -----------    -----------
 
Net income                                 $  748,836   $  597,029    $ 2,238,113    $ 1,799,040
                                           ==========   ==========    ===========    ===========
 
Net income
        per Beneficiary Interest           $     0.33   $     0.26    $      0.97    $      0.79
                                           ==========   ==========    ===========    ===========
Cash distributions declared
        per Beneficiary Interest           $     0.35   $     0.53    $      0.98    $      1.79
                                           ==========   ==========    ===========    ===========
 
</TABLE>
                  The accompanying notes are an integral part
                         of these financial statements.

                                       4
<PAGE>
 
                             AFG Investment Trust D

                            STATEMENT OF CASH FLOWS
             for the nine months ended September 30, 1996 and 1995

                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                              1996           1995
                                          -------------  -------------
<S>                                       <C>            <C>
Cash flows from (used in) operating
 activities:                              
Net income                                $  2,238,113   $  1,799,040

Adjustments to reconcile net income to
 net cash from operating activities:        
        Depreciation and amortization       10,604,049      7,875,321    
        (Gain) loss on sale of equipment        92,007         (1,542)

Changes in assets and liabilities
    Decrease (increase) in:
        rents receivable                      1,006,461       (623,550)
        accounts receivable - affiliate       (555,726)       272,425
    Increase (decrease) in:
        accrued interest                      (141,013)       106,785
        accrued liabilities                    (25,101)       (24,533)
        accrued liabilities - affiliate         17,348        180,186
        deferred rental income                (147,500)       416,422
                                          ------------   ------------
        Net cash from operating             13,088,638     10,000,554
         activities                       ------------   ------------

Cash flows from (used in) investing
 activities:                                
    Purchase of equipment                    1,243,539)   (34,544,180)
    Proceeds from equipment sales              268,503        105,621
                                          ------------   ------------
        Net cash used in investing            (975,036)   (34,438,559)
         activities                       ------------   ------------

Cash flows from (used in) financing
 activities:                                        
    Proceeds from capital contributions             --      5,882,925
    Payment of selling commissions                  --       (411,805)
    Payment of organization and 
          offering costs                            --       (147,073)
    Proceeds from notes payable              7,882,404     25,274,217
    Proceeds from notes payable -               
         affiliate                                  --         30,801
    Principal payments - notes payable     (11,738,172)    (6,379,315)
    Principal payments - notes payable              
         - affiliate                                --        (30,801)
    Distributions paid                      (2,175,350)    (4,267,217)
                                          ------------   ------------
        Net cash from (used in)             
         financing activities               (6,031,118)    19,951,732
                                          ------------   ------------
Net increase (decrease) in cash and          
 cash equivalents                            6,082,484     (4,486,273)

Cash and cash equivalents at beginning       
 of period                                     669,998      9,798,360
                                          ------------   ------------
Cash and cash equivalents at end of   
 period                                   $  6,752,482   $  5,312,087
                                          ============   ============
 
Supplemental disclosure of cash flow      
information:                              
     
Cash paid during the period for interest  $  2,769,128   $  2,179,067
                                          ============   ============        
                     
   
</TABLE>

                  The accompanying notes are an integral part
                         of these financial statements.

                                       5
<PAGE>
 
                             AFG Investment Trust D
                       Notes to the Financial Statements

                               September 30, 1996
                                  (Unaudited)



   NOTE 1 - BASIS OF PRESENTATION
   ------------------------------

      The financial statements presented herein are prepared in conformity with
   generally accepted accounting principles and the instructions for preparing
   Form 10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
   Commission and are unaudited.  As such, these financial statements do not
   include all information and footnote disclosures required under generally
   accepted accounting principles for complete financial statements and,
   accordingly, the accompanying financial statements should be read in
   conjunction with the footnotes presented in the 1995 Annual Report.  Except
   as disclosed herein, there has been no material change to the information
   presented in the footnotes to the 1995 Annual Report.

      In the opinion of management, all adjustments (consisting of normal and
   recurring adjustments) considered necessary to present fairly the financial
   position at September 30, 1996 and December 31, 1995 and results of
   operations for the three and nine month periods ended September 30, 1996 and
   1995 have been made and are reflected.


   NOTE 2 - ORGANIZATION AND TRUST MATTERS
   ---------------------------------------

      The Trust issued 204,355 Beneficiary Interests to 260 investors for an
   aggregate purchase price of $5,108,875 on October 26, 1993, its first Interim
   Close.  Sixteen subsequent Interim Closes in 1993, 1994 and 1995 resulted in
   the issuance by the Trust of an additional 1,884,675 Beneficiary Interests to
   2,375 investors for an aggregate purchase price of $47,116,875.  The Trust's
   Final Closing occurred on February 6, 1995.  No additional Beneficiary
   Interests will be issued.  In total, the Trust has issued 2,089,030
   Beneficiary Interests representing a total purchase price of $52,225,750 to
   2,635 investors.

   Net Income and Cash Distributions Per Beneficiary Interest
   ----------------------------------------------------------

      Net income and cash distributions per Beneficiary Interest are based on
   2,089,030 Beneficiary Interests outstanding during each of the three and nine
   months ended September 30, 1996 and the three months ended September 30,
   1995.  Net income and cash distributions per Beneficiary Interest for the
   nine months ended September 30, 1995 are based on 2,068,168 Beneficiary
   Interests which was calculated using the weighted average number of
   Beneficiary Interests outstanding during the period after allocation of the
   Managing Trustee's and Special Beneficiary's shares of net income and cash
   distributions.  The weighted average number of Beneficiary Interests was
   calculated based on the total number of Beneficiary Interests outstanding and
   the number of days each Beneficiary Interest was outstanding during the
   period.


   NOTE 3 - CASH
   -------------

      The Trust invests excess cash with large institutional banks in reverse
   repurchase agreements with overnight maturities.  The reverse repurchase
   agreements are secured by U.S. Treasury Bills or interests in U. S.
   Government securities.


   NOTE 4 - REVENUE RECOGNITION
   ----------------------------

      Rents are payable to the Trust monthly, quarterly or semi-annually and no
   significant amounts are calculated on factors other than the passage of time.
   The leases are accounted for as operating leases and

                                       6
<PAGE>
 
                             AFG Investment Trust D
                       Notes to the Financial Statements

                                  (Continued)


are noncancellable.  Rents received prior to their due dates are deferred.
Future minimum rents of $60,164,923 are due as follows:
<TABLE>
<CAPTION>
 
<S>                                         <C>
  For the year ending September 30, 1997    $20,421,043
                                    1998     16,669,939
                                    1999     11,909,754
                                    2000      6,166,031
                                    2001      2,627,119
                              Thereafter      2,371,037
                                            -----------
 
                                   Total    $60,164,923
                                            ===========
</TABLE>

  During March 1996, the Trust acquired an 8.86% proportionate ownership
interest in an MD-87 jet aircraft leased by Reno Air, Inc. (the "Reno Aircraft")
pursuant to the reinvestment provisions of the Trust's prospectus. The Trust
will receive approximately $157,000 of rental revenue in each of the years in
the period ending September 30, 2002 and $39,000 in the year ending September
30, 2003.  Rents from the Reno Aircraft, as provided for in the lease agreement,
are adjusted monthly for changes of the London Inter-Bank Offered Rate
("LIBOR").  Future rents from the Reno Aircraft included above reflect the most
recent LIBOR effected rental payment.

NOTE 5 - EQUIPMENT
------------------

  The following is a summary of equipment owned by the Trust at September 30,
1996.  In the opinion of American Finance Group ("AFG"), the acquisition cost of
the equipment did not exceed its fair market value.
<TABLE>
<CAPTION>
 
                                                  Lease Term         Equipment
Equipment Type                                     (Months)           at Cost
--------------                                    ---------         ----------              
<S>                               <C>                           <C>
 
Vessels                                            73-90          $ 23,171,463
Aircraft                                           48-81            22,779,945
Railroad                                           36-72            17,205,933
Computers & peripherals                            17-60             7,780,151
Construction & mining                              48-84             6,205,962
Materials handling                                 36-84             6,124,033
Retail store fixtures                              36-60             4,930,049
Manufacturing                                      48-60             3,849,128
Miscellaneous                                      48-60             3,564,568
Communications                                     30-36             1,834,800
Tractors & heavy duty trucks                       12-48             1,292,948
Trailers/intermodal containers                     36-60               812,037
Research & test                                    36-60               664,901
Furniture & fixtures                                  48               271,945
Photocopying                                          36                65,711
Motor vehicles                                        60                38,499
                                                                  ------------
                                           Total equipment cost    100,592,073

                                       Accumulated depreciation    (26,428,933)
                                                                   ------------
 
                     Equipment, net of accumulated depreciation   $ 74,163,140
                                                                  ============
</TABLE>

                                       7
<PAGE>
 
                             AFG Investment Trust D
                       Notes to the Financial Statements

                                  (Continued)

  At September 30, 1996, the Trust's equipment portfolio included equipment
having a proportionate original cost of $24,664,362, representing approximately
25% of total equipment cost.

  At September 30, 1996, the Trust was not holding any equipment not subject to
a lease and no equipment was held for sale or re-lease.


NOTE 6 - RELATED PARTY TRANSACTIONS
-----------------------------------

  All operating expenses incurred by the Trust are paid by AFG on behalf of the
Trust and AFG is reimbursed at its actual cost for such expenditures.  Fees and
other costs incurred during the nine month periods ended September 30, 1996 and
1995, which were paid or accrued by the Trust to AFG or its Affiliates, are as
follows:
<TABLE>
<CAPTION>
 
                                             1996         1995
                                          -----------  -----------
<S>                                       <C>          <C>
 
Reimbursements for selling commissions     $       --   $  411,805
Reimbursements for organization
  and offering costs                               --      147,073
Equipment acquisition fees                     36,120       95,875
Equipment management fees                     733,004      532,187
Administrative charges                         15,750       15,750
Reimbursable operating expenses
  due to third parties                        427,285      216,762
Interest on notes payable - affiliate              --        1,707
                                           ----------   ----------
 
                         Total             $1,212,159   $1,421,159
                                           ==========   ==========
 
</TABLE>

  All rents and the proceeds from the sale of equipment are paid directly to
either AFG or to a lender.  AFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Trust.  At
September 30, 1996, the Trust was owed $665,277 by AFG for such funds and the
interest thereon.  These funds were remitted to the Trust in October 1996.

  American Finance Group Securities Corp., an affiliate of AFG, was paid the
entire amount of selling commissions incurred at each of the Closings of the
Trust.  Commissions of $411,805, relating to the Closings during 1995, were then
paid to the Soliciting Dealers responsible for the sales.  No Soliciting Dealer
commissions were earned by American Finance Group Securities Corp. for Interests
sold to an unrelated party.


NOTE 7 - NOTES PAYABLE
----------------------

  Notes payable at September 30, 1996 consisted of installment notes of
$38,800,037 payable to banks and institutional lenders.  The notes bear interest
rates ranging between 5.1% and 13.75%, except for one note which bears a
fluctuating interest rate based on LIBOR plus a margin (5.4% at September 30,
1996).  All of the installment notes are non-recourse, and are collateralized by
the equipment and assignment of the related lease payments.  Generally, the
installment notes will be fully amortized by noncancellable rents.  However, the
Trust has a balloon payment obligation at the expiration of the primary lease
term related to the Reno Aircraft.  The 

                                       8
<PAGE>

                            AFG Investment Trust D
                       Notes to the Financial Statements

                                  (Continued)
 
installment notes will be fully amortized by noncancellable rents. The carrying
value of notes payable approximates fair value at September 30, 1996.

The annual maturities of the notes payable are as follows:
<TABLE>
<CAPTION>
 
<S>                                  <C>    <C>
For the year ending September 30,     1997   $13,622,044
                                      1998    10,108,020
                                      1999     7,502,021
                                      2000     3,786,598
                                      2001     1,747,067
                                Thereafter     2,034,287
                                            ------------
 
                                     Total   $38,800,037
                                            ============
 
</TABLE>
NOTE 8 - SUBSEQUENT EVENT
-------------------------

  On October 26, 1996, the Managing Trustee, on behalf of the Trust, filed a
Solicitation Statement with the Securities and Exchange Commission which was
subsequently sent to the Beneficiaries pursuant to Regulation 14A of  Section 14
of the Securities Exchange Act.  The Solicitation Statement seeks to solicit the
consent of the Beneficiaries to a proposed amendment ("the Amendment") to the
Amended and Restated Declaration of Trust (the "Trust Agreement").

  The Amendment would (i) amend the provisions of the Trust Agreement governing
the redemption of Interests to permit the Trust to offer to redeem outstanding
interests at such times, in such amounts, in such manner and at such prices as
the Managing Trustee may determine from time to time, in accordance with
applicable law; and (ii) add a provision to the Trust Agreement that would
permit the Trust to issue, at the discretion of the Managing Trustee and without
further consent or approval of the Beneficiaries, an additional class of
security with such designations, preferences and relative, participating,
optional or other special rights, powers and duties as the Managing Trustee may
fix.  Such a security, if it were to be offered and sold, would provide the
Trust with the funds to a) implement more expansive Interest redemption
opportunities for Beneficiaries without using Trust funds which may otherwise be
available for current cash distributions; and b) make a special one-time
distribution to the Beneficiaries.

  Pursuant to the Trust Agreement, the adoption of the Amendment requires the
consent of the Beneficiaries holding more than fifty percent in the aggregate of
the Interests held by all Beneficiaries.  To be valid, consent forms must be
received by the Managing Trustee by December 6, 1996 (subject to extension at
the discretion of the Managing Trustee).  The outcome of this solicitation can
not be determined at this time.

                                       9
<PAGE>
 
                             AFG Investment Trust D

                                   FORM 10-Q

                         PART I.  FINANCIAL INFORMATION
                        



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations.
------------- 

Three and nine months ended September 30, 1996 compared to the three and nine
-----------------------------------------------------------------------------
months ended September 30, 1995:
--------------------------------

Overview
--------

  As an equipment leasing trust, the Trust was organized to acquire a
diversified portfolio of capital equipment subject to lease agreements with
third parties.  The Trust was designed to progress through three principal
phases:  acquisitions, operations, and liquidation.  During the operations
phase, a period of approximately six years, all equipment in the Trust's
portfolio will progress through various stages.  Initially, all equipment will
generate rental revenues under primary term lease agreements.  During the life
of the Trust, these agreements will expire on an intermittent basis and
equipment held pursuant to the related leases will be renewed, re-leased or
sold, depending on prevailing market conditions and the assessment of such
conditions by AFG to obtain the most advantageous economic benefit.  Over time,
a greater portion of the Trust's original equipment portfolio will become
available for remarketing and cash generated from operations and from sales or
refinancings will begin to fluctuate.  Ultimately, all equipment will be sold
and the Trust will be dissolved.  The Trust's operations commenced in 1993.


Results of Operations
---------------------

  For the three and nine months ended September 30, 1996, the Trust recognized
lease revenue of $5,508,081 and $16,637,773, respectively, compared to
$4,454,472 and $12,369,593 for the same periods in 1995.  The increase in lease
revenue from 1995 to 1996 was attributable principally to the acquisition of
additional equipment subsequent to September 30, 1995, including the effects of
reinvestment.  The Trust's original equipment acquisition and leveraging
processes were completed in 1995.  Future remarketing activities will cause
rental revenues to decline.  However, in the near-term, the Trust's aggregate
rental revenues are expected to increase due to reinvestment activities.

  The Trust's equipment portfolio includes certain assets in which the Trust
holds a proportionate ownership interest.  In such cases, the remaining
interests are owned by AFG or an affiliated equipment leasing program sponsored
by AFG.  Proportionate equipment ownership enables the Trust to further
diversify its equipment portfolio by participating in the ownership of selected
assets, thereby reducing the general levels of risk which could result from a
concentration in any single equipment type, industry or lessee.  The Trust and
each affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment.

  Interest income for the three and nine months ended September 30, 1996 was
$53,701 and $100,550, respectively, compared to $76,910 and $354,016 for the
same periods in 1995.  Interest income is generated from temporary investment of
rental receipts and unexpended capital contributions in short-term money market
instruments.  Interest income was higher in 1995 than 1996 due to the temporary
investment of cash prior to the acquisition of equipment.  The amount of future
interest income is expected to fluctuate in relation to prevailing interest
rates and the collection of lease revenue and equipment sales proceeds.

  During the nine months ended September 30, 1996, the Trust sold equipment
having a net book value of $360,510 to existing lessees and third parties.
These sales resulted in a net loss, for financial statement 

                                       10
<PAGE>
                                AGF Investment Trust D

                                      FORM 10-Q
           
                             PART I. FINANCIAL INFORMATION 


purposes, of $92,007 compared to a net gain of $1,542 on equipment having a net
book value of $104,079 for the same period in 1995.

  During the three months ended September 30, 1995, the Trust sold equipment
having a net book value of $49,754 to existing lessees and third parties.  These
sales resulted in a net loss, for financial statement purposes, of $5,645.
There were no equipment sales during the same period in 1996.

  It cannot be determined whether future sales of equipment will result in a net
gain or a net loss to the Trust, as such transactions will be dependent upon the
condition and type of equipment being sold and its marketability at the time of
sale.  In addition, the amount of gain or loss reported for financial statement
purposes is partly a function of the amount of accumulated depreciation
associated with the equipment being sold.

  The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including AFG's ability to sell and re-lease
equipment.  Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time.  AFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Trust and which will maximize
total cash returns for each asset.

  The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value.  The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis.  The Trust classifies such
residual rental payments as lease revenue.  Consequently, the amount of gain or
loss reported in the financial statements is not necessarily indicative of the
total residual value the Trust achieved from leasing the equipment.

  Depreciation and amortization expense for the three and nine months ended
September 30, 1996 was $3,522,837 and $10,604,049, respectively, compared to
$2,805,791 and $7,875,321 for the same periods in 1995.  For financial reporting
purposes, to the extent that an asset is held on primary lease term, the Trust
depreciates the difference between (i) the cost of the asset and (ii) the
estimated residual value of the asset on a straight-line basis over such term.
For purposes of this policy, estimated residual values represent estimates of
equipment values at the date of primary lease expiration.  To the extent that an
asset is held beyond its primary lease term, the Trust continues to depreciate
the remaining net book value of the asset on a straight-line basis over the
asset's remaining economic life.  The increase in depreciation expense from 1995
to 1996 reflects the acquisition of equipment subsequent to September 30, 1995.

  Interest expense was $864,785 and $2,628,115 or 15.7% and 15.8% of lease
revenue for the three and nine months ended September 30, 1996, respectively,
compared to $857,274 and $2,286,091 or 19.3% and 18.5% of lease revenue for the
same periods in 1995.  The increase in interest expense from 1995 to 1996 was
due to additional leveraging obtained in 1995 and 1996.  Interest expense in the
near-term is expected to increase due to leveraging obtained during the nine
months ended September 30, 1996 and additional leveraging expected to be
obtained to partially finance the acquisition of reinvestment equipment.
Thereafter, interest expense will decline in amount and as a percentage of lease
revenue as the principal balance of notes payable is reduced through the
application of rent receipts to outstanding debt.

  Management fees were 4.4% of lease revenue for each of the three and nine
months ended September 30, 1996 compared to 4.3% of lease revenue for each of
the same periods in 1995.  Management fees are based on 5% of gross lease
revenue generated by operating leases and 2% of gross lease revenue generated by
full payout leases.

                                       11
<PAGE>
                                  AGF Investment Trust D
                          
                                        FORM 10-Q 

                              PART I. FINANCIAL INFORMATION



  Operating expenses consist principally of administrative charges, professional
service costs, such as audit and legal fees, as well as printing, distribution
and remarketing expenses.  Collectively, operating expenses represented 3.3% and
2.7% of lease revenue for the three and nine months ended September 30, 1996,
respectively, compared to 1.6% and 1.9% of lease revenue for the same periods in
1995.  The increase in operating expenses from 1995 to 1996 was due to
remarketing fees incurred in connection with the sale of certain equipment and
fees incurred in connection with the refinancing of the Trust's interest in a
vessel.  The amount of future operating expenses cannot be predicted with
certainty; however, such expenses are usually higher during the acquisition and
liquidation phases of a trust.


Liquidity and Capital Resources and Discussion of Cash Flows
------------------------------------------------------------

  The Trust by its nature is a limited life entity which was established for
specific purposes described in the preceding "Overview".  As an equipment
leasing program, the Trust's principal operating activities derive from asset
rental transactions.  Accordingly, the Trust's principal source of cash from
operations is provided by the collection of periodic rents.  These cash inflows
are used to satisfy debt service obligations associated with leveraged leases,
and to pay management fees and operating costs.  Operating activities generated
net cash inflows of $13,088,638 and $10,000,554 for the nine months ended
September 30, 1996 and 1995, respectively.  In the near-term, net cash inflows
generated from operating activities are expected to increase due to the
reinvestment of available proceeds in other equipment.  Thereafter, renewal, re-
lease and equipment sale activities will cause a gradual decline in the Trust's
lease revenue and corresponding sources of operating cash.  Overall, expenses
associated with rental activities, such as management fees, and net cash flow
from operating activities will decline as the Trust experiences a higher
frequency of remarketing events.

  Ultimately, the Trust will dispose of all assets under lease.  This will occur
principally through sale transactions whereby each asset will be sold to the
existing lessee or to a third party.  Generally, this will occur upon expiration
of each asset's primary or renewal/re-lease term.  In certain instances,
casualty or early termination events may result in the disposal of an asset.
Such circumstances are infrequent and usually result in the collection of
stipulated cash settlements pursuant to terms and conditions contained in the
underlying lease agreements.

  Cash expended for asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows.  The Trust expended $1,243,539 and $34,544,180 to
acquire equipment during the nine months ended September 30, 1996 and 1995,
respectively.  During the nine months ended September 30, 1996, $1,239,741 of
equipment was acquired pursuant to the reinvestment provision of the Trust's
prospectus.  This equipment was financed through a combination of leveraging and
the reinvestment of sale proceeds.  In addition, equipment in the amount of
$3,798 was acquired in July 1996 in connection with a pre-existing lease
agreement.  During the nine months ended September 30, 1996, the Trust realized
$268,503 in equipment sale proceeds, compared to $105,621 during the same period
in 1995.  Future inflows of cash from asset disposals will vary in timing and
amount and will be influenced by many factors including, but not limited to the
frequency and timing of lease expirations, the type of equipment being sold, its
condition and age, and future market conditions.

  The Trust obtained long-term financing in connection with certain equipment
leases.  The origination of such indebtedness and the subsequent repayments of
principal are reported as components of financing activities.  Cash inflows of
$7,882,404 and $25,274,217 during the nine months ended September 30, 1996 and
1995, respectively, resulted from leveraging a portion of the Trust's equipment
portfolio with third-party lenders. In September 1996, the Trust received
$5,416,667 from the refinancing of its interest in a vessel.  The Trust repaid

                                       12
<PAGE>
                          AGF Investment Trust D

                                FORM 10-Q         

                      PART I. FINANCIAL INFORMATION 
  


the existing debt associated with the vessel of $1,912,591 plus accrued interest
thereon and the balance of the refinancing proceeds is expected to be used to
acquire additional equipment pursuant to the reinvestment provisions of the
Trust's prospectus.  AFG also provided interim financing to the Trust until
third-party financing was finalized.  The Trust received $30,801 of such
financing during the nine months ended September 30, 1995.  There was no
financing provided by AFG during the same period in 1996.

  Each note payable is recourse only to the specific equipment financed and to
the minimum rental payments contracted to be received during the debt
amortization period (which period generally coincides with the lease rental
term).  As rental payments are collected, a portion or all of the rental payment
is used to repay the associated indebtedness.  In the near-term, the amount of
cash used to repay debt obligations will continue to increase as a result of
leveraging obtained during the nine months ended September 30, 1996 and
additional leveraging expected to be obtained to partially finance the
acquisition of reinvestment equipment.  Subsequently, the amount of cash used to
repay debt obligations will decline as the principal balance of notes payable is
reduced through the collection and application of rents.

  During the nine months ended September 30, 1995, financing activities also
included cash inflows from capital contributions from the Beneficiaries (net of
selling commissions and organization and offering costs) of $5,324,047.
Substantially all of these funds were used to purchase equipment.  The Trust's
Final Closing of capital contributions occurred on February 6, 1995.

  Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within fifteen days following the
end of each calendar month.  The payment of such distributions is presented as a
component of financing activities.  For the nine months ended September 30,
1996, the Trust declared total cash distributions of Distributable Cash From
Operations and Distributable Cash From Sales and Refinancings of $2,247,864.  In
accordance with the Amended and Restated Declaration of Trust, the Beneficiaries
were allocated 90.75% of these distributions, or $2,039,937; the Special
Beneficiary was allocated 8.25%, or $185,449; and the Managing Trustee was
allocated 1%, or $22,478.

  Cash distributions paid to the Participants consist of both a return of and a
return on capital.  To the extent that cash distributions consist of Cash From
Sales or Refinancings, substantially all of such cash distributions should be
viewed as a return of capital.  Cash distributions do not represent and are not
indicative of yield on investment.  Actual yield on investment cannot be
determined with any certainty until conclusion of the Trust and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date.  Future market conditions, technological changes, the ability
of AFG to manage and remarket the assets, and many other events and
circumstances, could enhance or detract from individual asset yields and the
collective performance of the Trust's equipment portfolio.

  The future liquidity of the Trust will be influenced by the foregoing and will
be greatly dependent upon the collection of contractual rents and the outcome of
residual activities.  The Managing Trustee anticipates that cash proceeds
resulting from these sources will satisfy the Trust's future expense
obligations.  However, the amount of cash available for distribution in future
periods will fluctuate.  Equipment lease expirations and asset disposals will
cause the Trust's net cash from operating activities to diminish over time; and
equipment sale proceeds will vary in amount and period of realization.
Accordingly, fluctuations in the level of monthly cash distributions will occur
during the life of the Trust.

                                       13
<PAGE>
 
                            AFG Investment Trust D

                                   FORM 10-Q

                          PART II.  OTHER INFORMATION



     Item 1.             Legal Proceedings
                         Response:  None

     Item 2.             Changes in Securities
                         Response:  None

     Item 3.             Defaults upon Senior Securities
                         Response:  None

     Item 4.             Submission of Matters to a Vote of Security Holders
                         Response:  None

     Item 5.             Other Information
                         Response:  None

     Item 6(a).          Exhibits
                         Response:  None

     Item 6(b).          Reports on Form 8-K
                         Response:  None

                                       14
<PAGE>
 
  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on behalf of the registrant and in the capacity and
on the date indicated.



                             AFG Investment Trust D


                  By:  AFG ASIT Corporation, a Massachusetts
                       corporation and the Managing Trustee of
                       the Registrant.


                  By:  /s/  Michael J. Butterfield
                       ---------------------------
                       Michael J. Butterfield
                       Treasurer of AFG ASIT Corporation
                       (Duly Authorized Officer and
                       Principal Accounting Officer)


                Date:  November 13, 1996
                       -----------------



                  By:  /s/  Gary M. Romano
                       -------------------------------
                       Gary M. Romano
                       Clerk of AFG ASIT Corporation
                       (Duly Authorized Officer and
                       Principal Financial Officer)


                Date:  November 13, 1996
                       -----------------

                                       15